News on Home Equity Lines of Credit

As the housing market shows signs of stabilizing, lenders are starting to write home equity lines of credit (HELOC) again according to Money Magazine. The credit crisis and housing bust that occurred in various parts of the country led to thousands of homeowners having their HELOC cut or frozen and requests for new lines of credit rejected.

They may not be the bargain they used to be, but a line of credit can still be an inexpensive way for homeowners to borrow against the equity in their home. Previously, lenders often offered HELOCs at rates below prime. Today, HELOCs are being offered at prime plus a point or so.

If you are thinking of getting a HELOC, homeowners must have more than 20 percent equity in their home. Because lenders are only writing half as many home equity lines as they did when the economy and the real estate market were booming, homeowners are advised to borrow less and to spend wisely. HELOCs are not advised to be used on vacation or other non-necessities. Typically homeowners will use a HELOC for home improvements, in place of car loans or other private loans that have higher interest rates.

Our mortgage partners can help you learn more about qualifying for a line of credit.